Day 2 - Travel to Yilan early morning via train (other means of transport?)
-> Farm/minsu stay at Yilan. Where to stay? What else to do?

Day 3 & 4 - Travel to Hualien via train (other means of transport?)
-> Travel to Taroko Gorge. Should we stay overnight at Taroko Gorge or just join a day tour? Where to arrange for day tour?
-> Hualien. What to do and where to stay? Anywhere with nice sea view near the eastern coast?

Day 5 & 6 - Travel to Alishan
-> Getting there. I know we could take train from Hualien to Taipei, high-speed train to Chiayi, and then rail/bus. But is there a comfortable bus route from either Hualien or Tarako Gorge to Alishan with interesting scenaries along the way?
-> Alishan. 1 to 2 nights stay at Alishan. Where to stay and should we join the guided tours/activities there?

Day 7 - Travel to Taichung via train or high-speed train (other means of transport?)
-> Taichung City. Walk around and eat, eat, eat. Should we stay overnight at the city or somewhere else instead?

We will be going to Taiwan on 21 May 2010 for a 11D/10N self-help trip. Three of us, all young adults. First-timers. <snip>

Btw, I could speak and read chinese.

Welcome to FT!

It does seem you'll have a good chunk of time to explore and enjoy both urban and rural Taiwan & your language advantage won't hurt . It can only get better if you speak/understand Taiwanese.

I would love to give you more tailored advice if I am not currently tied up with a big family funeral. Sorry I can't offer too much help to your upcoming itinerary right now. I would suggest you to take a look at these threads and see if your destination cities/towns/attraction had been previously covered (by me or others):

3. There are other threads about Taroko Gorge and Taipei/Taiwan as well. Just look them up in Asia Forum.

I hope our other Taiwan experts and/or resident FTers will find time to chime in before you embark your first visit to Taiwan. Some explore Taiwan on foot and know Formosa much better than I do. Listen to them.

Since you read Chinese and have a plan to visit Alishan, you may want to check out the 2-day package deals from "2010 Southern Taiwan Spring/Summer Entertainment Book" (南台灣春夏版觀光護照) that covers 8 cities/counties in Southern Taiwan (Chiayi-Alishan, Tainan, Kaohsiung...etc). I didn't see any press release in English though. (ps. For those who are foreign to Traditional Chinese, try Google Translator )

There are 5 themes in these 2-day packages from 2010 Spring/Summer Entertainment Book: Ocean (海洋), Religion (宗教), Forestry (森林), Metropolitan (都會) and Historical Sites (古蹟). You'll find great coupons that offer up to 50% off on hotels and free breakfast/meals, perfect for those who travel in pairs.

Day 5 & 6 - Travel to Alishan
-> Getting there. I know we could take train from Hualien to Taipei, high-speed train to Chiayi, and then rail/bus. But is there a comfortable bus route from either Hualien or Tarako Gorge to Alishan with interesting scenaries along the way?
-> Alishan. 1 to 2 nights stay at Alishan. Where to stay and should we join the guided tours/activities there?

Just FYI, Alishan was hit pretty hard by a typhoon last year, and the train line there is out of commission until at least the end of the year.

Hotels at Alishan are of a muchness, but see Wikitravel for a few pointers.